Sanofi's first-quarter profit falls, warns of lower sales in diabetes unit

Sanofi announced Thursday that first-quarter net income slipped 5.6 percent year-over-year to 1 billion euros ($1.1 billion), hit by an accounting charge and restructuring costs. Meanwhile, sales in the three-month period climbed 12.3 percent to 8.8 billion euros ($9.9 billion), with the result boosted by the weaker European currency. The company noted that revenue rose 2.4 percent on a constant currency basis.

CEO Olivier Brandicourt remarked "Sanofi had a good start to 2015," adding "I will now be intensely focused on the successful launch of new drugs." The drugmaker maintained its guidance for stable to slightly growing profit at constant currencies in 2015. Meanwhile, foreign-exchange movements are expected to add 12 percent to earnings per share, up from a previous estimate of as much as 5 percent.

In the quarter, sales of prescription drugs jumped 11.3 percent to 7.5 billion euros ($8.4 billion), with revenue from the company's diabetes unit increasing 10.5 percent to 1.8 billion euros ($2 billion). However, Sanofi said the sales in the diabetes division declined 3.2 percent when measured at constant exchange rates. The drugmaker indicated that sales in the diabetes unit this year will likely follow the first-quarter pattern.

Sanofi reported that sales of Lantus lifted 9.4 percent year-over-year to 1.6 billion euros ($1.8 billion), broadly in line with estimates, although on a constant currency basis, revenue from the product dropped 5 percent, reflecting lower sales in the US. At the start of the year, the company cut the price of Lantus in order to compete with products from Novo Nordisk, after previously predicting that sales in the diabetes segment would be "broadly stable" in 2015.

"There was no Armageddon on the diabetes figures as some feared, and the rest of the numbers were solid," commented Natixis Securities analyst Philippe Lanone. However, Barclays analyst Michael Leuchten said the forecast for the diabetes division "is slightly worse than previously anticipated." Leuchten noted "that puts a lot more pressure on them delivering on Toujeo."

In February, Toujeo gained approval from the FDA, with the product posting quarterly sales of 7 million euros ($7.8 million). Leuchten said it's too early to tell whether that's promising, with analysts predicting that the drug will amass 140.6 million euros ($156.4 million) this year, reaching 1 billion euros ($1.1 billion) in 2019. For related analysis, read ViewPoints: Sanofi playing a bullish game with Toujeo.

According to Brandicourt, other potential new product launches this year include the PCSK9 inhibitor Praluent (alirocumab) and a vaccine against dengue, which he noted "have the potential to be groundbreaking therapies." The two, along with Toujeo, are among 18 new drugs Sanofi plans to introduce by 2020, which it has previously estimated could generate cumulative sales of 30 billion euros ($33.4 billion) over the first five years.

Sanofi and partner Regeneron Pharmaceuticals expect FDA approval of Praluent by July 24, with the agency set to reach a decision on Amgen's similar therapy Repatha (evolocumab) the next month. The FDA recently scheduled advisory committee meetings to review the two drugs in June. Analysts predict that if approved, Praluent will garner sales of more than $1 billion in 2017, and more than $2 billion by 2020. For related analysis, see Spotlight On: How are PBMs preparing for the impending anti-PCSK9 bonanza?

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